What Is an Investment Policy Statement—and Why Every Family Office Needs One

The Story of a Daughter, a Fortune, and the Map She Didn’t Know She Needed

Her name was Emily.

She was 36. A tech executive in New York, a sharp thinker with a calm presence. She wore denim to boardrooms and preferred oat milk in her coffee. Until a few months ago, she thought of herself as solidly upper-middle class—comfortably self-made.

Her parents had always been generous, but humble. Her late mother ran a pottery studio in Santa Barbara. Her father passed when she was 12. They lived well, but never lavishly. Emily believed in hard work. She never felt “rich.”

And then her mother died of cancer.

In the weeks that followed, Emily’s world tilted—not just from grief, but from a revelation she hadn’t expected:

She had inherited $100 million.

The Weight of Wealth You Never Asked For

Her mother had been quietly managing a significant portfolio for decades, guided by a discreet family office and trusted advisors. The assets had originated from her grandfather’s company—an early chip manufacturer acquired in the ’80s. Her mother kept it all private, never wanting Emily to be distracted by the idea of inheritance.

Now, the inheritance was Emily’s.

“I don’t even know where to start,” she said when we first spoke.

She wasn’t interested in yachts or family compounds. What she wanted was clarity—a way to steward this legacy responsibly. She had questions like:

• “How do I make sure I don’t screw this up?”

• “How much can I give each year without depleting it?”

• “Can I invest in climate solutions? Scholarships? My mother’s art foundation?”

• “What do I do when advisors disagree?”

What Emily needed was not another pitch from a bank or investment firm.

What she needed was an Investment Policy Statement (IPS).

So, What Is an IPS?

An Investment Policy Statement is the master blueprint for managing wealth. It isn’t a spreadsheet. It’s not just an asset allocation pie chart. It’s a living document that articulates your values, your goals, and the rules of engagement for your capital.

For families, it’s the difference between drifting and steering.

At its core, an IPS answers six key questions:

1. What is the purpose of this wealth?

2. What are our long-term goals?

3. What is our risk tolerance and time horizon?

4. What are we allowed (and not allowed) to invest in?

5. Who makes decisions, and how?

6. How do we measure success?

   
   

Emily’s IPS: From Overwhelmed to Empowered

Over several conversations—some over coffee, some in silence as she worked through grief—we began building Emily’s IPS.

Step 1: Mission FirstWe started not with markets, but with meaning. Emily wanted to support female founders in climate-tech, contribute to early childhood education, and preserve her mother’s art collection.

That became her IPS foundation:

“To invest in a way that enables long-term capital preservation, multi-generational giving, and alignment with my values around sustainability, education, and the arts.”

Step 2: Defining GuardrailsWe wrote clear policies on:

• Annual spending rate (3.5% of a rolling 3-year average)

• Asset allocation (60% growth, 30% income, 10% impact/venture)

• Exclusions (no fossil fuels, no tobacco, no private prisons)

Step 3: Governance StructureEmily wanted to stay involved, but not micromanage. We created a structure where her advisors managed day-to-day operations, with quarterly reviews, an annual impact report, and a plan to establish a future foundation board.

Step 4: Flexibility for Life EventsWe added a clause: in times of personal crisis or opportunity, she could make short-term deviations—say, to fund a cancer research gift in her mother’s name or invest in a close friend’s mission-driven startup.

Why Every Family Office—Big or Small—Needs One

Whether you’re handling $10 million or $100 million, wealth without a plan creates confusion, conflict, or decay.

An IPS is:

• A governance tool for when family members disagree.

• A reference point when markets are volatile and emotions run high.

• A legacy document for the next generation.

It’s the thing most first-generation wealth creators never had time to build—but what second-generation stewards need most.

A Final Thought from Emily

Six months after our first meeting, Emily emailed me.

“I never thought I'd be the person who needed an IPS. But now, I realize it’s the most empowering thing I’ve done since inheriting this wealth. I’m not just managing money—I’m managing meaning.”

And that’s why every family office, new or old, should begin here.